While developing Asia has used fragmentation and industrial agglomeration as leverage to create impetus for sustaining its competitiveness, the downside risks of just-in-time procurement and production have not been sufficiently emphasized. Based on the experience of Thailand's flooding in 2011, this study examines the extent to which the supply chain disruptions are translated into plunges in production and export performance, and explores how companies can effectively manage the risks and cope with supply chain breakdowns. The analysis reveals implications that corporate culture and management mindsets need to take into consideration the potential sources and impacts of risks and to assess them systematically. Redundancy in principle offers a shock absorber, but investment in untapped inventory and suppliers can be prohibitively costly. Last, enhancing the flexibility of supply chains through information exchange and coordination in vertical relationships is crucial to ensuring resilience against high-impact, low-probability shocks.
production networks just-in-time procurement supply chain disruptions Thailand flooding